Letter from the Remuneration committee chairman

Dear Shareholder,

As the new chairman of the Remuneration committee, I
am pleased to introduce our report on remuneration
for 2011, for which we seek your support at our
annual general meetings in London in April, and in
Brisbane in May.

The report is designed to provide you with the
necessary information to demonstrate the link
between our Group’s strategy, its performance,
and the remuneration outcomes for its executives. It
is also intended to deliver the remuneration
disclosures required by Australian and UK
regulation.

In writing to you, I am fully aware of the strength
of feeling which the subject of executive
remuneration provokes; and I’m aware too that
many of our shareholders have registered their
concerns through their votes and abstentions on the
remuneration report at our recent annual general
meetings. Both the board and the Remuneration
committee have reflected very carefully on this. I
realise that the decisions made by the Committee
will not always please all our owners: if we seek
perfect consensus among shareholders, I’m
afraid we will seek in vain. But we are conscious of
our obligation to be as accessible to you as we can
so that, on behalf of the board, I hear your views,
and try to answer your questions; and in so doing,
carry those opinions into our decision-making
forums. Since my appointment I have met a number of
major shareholders in the UK and in Australia and
this process has been invaluable to me in
understanding shareholders’ perspectives on
legacy and current issues.

Reflecting shareholder feedback, we will be bringing
to our 2013 annual general meetings proposals
relating to the future structure of our incentive
plans. We intend to consult widely on these
proposals, and on the broader remuneration context,
particularly during 2012, so that by the time we
make our recommendations to you in 2013, we will
have had the benefit of the thoughts and feedback of
as many major shareholders as practical.

Our remuneration strategy and policies focus on
using remuneration resource to help implement a
successful corporate strategy that will create
superior value for our shareholders over the long
term. We see that resource as yours; and our
endeavour is to use it wisely to promote and protect
your interests. We want to use it to ensure that
your Company can attract, motivate and retain the
high quality and committed people that are critical
to lead the business.

We seek to reward employees fairly and responsibly,
by providing an appropriate balance between fixed
and variable remuneration, the payment of which is
linked to the achievement of what are intended to be
demanding Group and individual performance measures.
But our aim is to pay no more than is necessary to
achieve this goal.

Whilst we delivered another record year of
underlying earnings performance, short term
incentive payments are, on average, lower than in
2010 as the Group did not outperform to the same
extent, the challenging financial and safety targets
set by your Board for 2011. I also acknowledge the
responsibility shown by Tom Albanese and Guy Elliott
in informing the Remuneration committee that they
did not wish to be considered for an annual bonus in
the light of the impairments in our Aluminium
business. The Committee endorsed
this request.

This year, we have introduced a different format to
the remuneration report. We have responded to the
request for greater simplicity by providing you with
the essential remuneration narrative in the first
sections of the report, amplified by the
ever-increasing disclosures required by Australian
and UK statute and regulation which appear, piece by
piece, in the pages that follow. So the sections
which follow this letter are:

About the report

Our remuneration strategy and approach

What we paid our executive directors and why

Remuneration committee responsibilities,
independent advisers, and how the Committee spent
its time in 2011

Appendix: detailed remuneration disclosures.

We hope this presentation makes our approach, and
the facts behind it, more accessible. We would find
it very helpful to know in due course what you
think.

Related links

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